24 Aug Why won’t this bank release my inherited funds?

Q. A bank is not releasing a checking account, savings account, CDs and two IRAs, which I inherited from my cousin, saying I am considered a Class A beneficiary and I need a inherited waiver — Form O-1 There is no will and beneficiary forms say to be paid on death. Do I need this form? If so, how do I get it? If not, how do I get them to release funds?
— Heir

A. We’re sorry to hear about your cousin.

There are a few things to consider here, and we think you may have been somewhat misinformed by the bank.

You are not a Class A beneficiary, said Tom Szieber, a trusts and estates attorney at Herold Law in Warren.

The State of New Jersey classifies Class A beneficiaries as spouses, civil union partners, domestic partners, ancestors or descendants, including stepchildren and legally adopted children, he said.

As a cousin, you would be considered a Class D beneficiary, he said.

The existence of a non-Class A beneficiary triggers the requirement that a New Jersey inheritance tax return be filed on behalf of the estate, Szieber said.

“When a New Jersey inheritance tax return is required, a financial institution will typically freeze half of an account’s funds until it receives a Form O-1, which is a tax clearance waiver issued by the New Jersey Division of Taxation upon the filing of the return and payment of all tax due,” he said. “Responsibility for filing the return in the case of an estate without a will would fall on the administrator, if one has been appointed by the surrogate in the county where the decedent died.”

Once the Form O-1 is issued, it can then be provided to the institution, which should then unfreeze the accounts, he said.

If no administrator has been appointed, an heir-at-law — relatives who would inherit funds by law if there is not will — can file the return, but it’s unclear whether you are an an heir-at-law.

“If not, the proper heir(s)-at-law would need to file the return or, if he or she is unable or unwilling to do so, then the questioner may want to consider applying to be the administrator himself/herself,” he said. “The questioner should consult with an attorney to determine the best course of action.”

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This story was originally published on Aug. 24, 2021.

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